A firm is thinking about consolidating its mobile battery assembly in one location. Theleading candidate location has a monthly fixed cost of $50,000, and variable cost of $5 perbattery. Mobile batteries sell for $10 each.a. Prepare a schedule showing total profits, fixed costs, variable costs, and revenues forquantities of 10,000 and 15,000 and 20,000. What is the breakeven point?b. If the factory was given the choice to buy the mobile battery from a factory charging $9per battery, what is the indifference point?

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A firm is thinking about consolidating its mobile battery assembly in one location. The leading candidate location has a monthly fixed cost of $50,000, and variable cost of $5 per battery. Mobile batteries sell for $10 each.

A firm is thinking about consolidating its mobile battery assembly in one location. The leading candidate location has a monthly fixed cost of $50,000, and variable cost of $5 per battery. Mobile batteries sell for $10 each.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

A firm is thinking about consolidating its mobile battery assembly in one location. The
leading candidate location has a monthly fixed cost of $50,000, and variable cost of $5 per
battery. Mobile batteries sell for $10 each.
a. Prepare a schedule showing total profits, fixed costs, variable costs, and revenues for
quantities of 10,000 and 15,000 and 20,000. What is the breakeven point?
b. If the factory was given the choice to buy the mobile battery from a factory charging $9
per battery, what is the indifference point?

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